Before Lee Rhiannon became known as a hard left-wing senator for the Australian Greens, she was a neophyte politician in the NSW upper house.

Not long after she was first elected in 1999, a Labor friend confided in Rhiannon some shocking information: their parliamentary colleague Eddie Obeid was suspected by his party colleagues to be corrupt.

Obeid was a leader of Labor's right faction, along with ally Joe Tripodi. Among the left there was deep suspicion about Obeid's motivations and behaviour.

"All the ALP Left MPs were warned about Obeid," a former Labor president of the NSW upper house, Meredith Bergmann, says today.

Bill Shorten campaigning with Kristina Keneally in Bennelong on November 28.
Nick Moir

Swagger

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Rhiannon was astounded by the man's swagger. Made Minister for Mineral Resources and Fisheries the year she was elected, Obeid and his cronies treated attempts at legitimate parliamentary scrutiny with contempt.

Who knew what, when, about the now-jailed Obeid has become pertinent again today because the woman he and Tripodi made premier, Kristina Keneally, is running for federal office in the seat of Bennelong. If victorious, she would end the Coalition's parliamentary majority.

Keneally, who was in the NSW lower house from 2003 to 2012, declines to talk about what she knew or didn't know. One big unanswered question: why did she not only reappoint Obeid's corrupt lieutenant, Ian Macdonald, to cabinet when she was made premier, but increase his responsibilities by adding the patronage-packed major events portfolio three months later?

Eddie Obeid when he was minister for mineral resources and fisheries in 2000.
Laura Friezer

Stench of corruption

Rhiannon reasons the stink around Obeid was so strong that it could not have escaped Keneally's nostrils.

About 2006, Rhiannon was approached by a couple of Hunter Valley coal miners. They told her about a weird plan approved by Macdonald to build a "training mine" near a national park. Miners learn their trade in real mines, they told Rhiannon, and this could make the owners hundreds of millions.

"I thought, 'this just doesn't add up', because there was plenty of other places where people could get trained," one of the miners, Peter Kennedy, says today.

Former NSW minister Ian Macdonald after being found guilty of corruption.
Daniel Munoz

It wasn't like the project was a secret. The owner, which was issued a free mining licence by Macdonald, was listed on the stock exchange. The Doyles Creek mine was a scam, and six months ago Macdonald was sentenced to 10 years' jail over it.

"I think Keneally must have known enormous amounts of what was going on," Rhiannon says. "If I as a backbencher, who is being ridiculed at question time and estimates, can pick it up, she as a well-connected person at the highest levels of the Labor government should have known."

Ridicule

The Keneally camp's response is to ridicule Rhiannon as a "recently dumped senator dredging up smear because she's suffering from relevance deprivation".

It is true that Rhiannon, after six years in the Senate, has been demoted by her party and looks likely to lose her seat. But she is recognised as an MP who fought corruption within the NSW Parliament – against bipartisan indifference.

"Rhiannon was tireless in attempting to expose problematical characters on both sides, especially Obeid and his cronies," says Geoffrey Watson, a barrister hired by the NSW Independent Commission Against Corruption to pursue Obeid.

Keneally, who has exaggerated Watson's praise of her anti-corruption credentials, asserts she was the heroine of ICAC. "She stopped them," her spokeswoman says.

Standing silent

To Keneally's credit, she did block attempts to award a huge contract to a dodgy water company that indirectly employed one of Obeid's sons.

When Macdonald was caught by the media taking free airline flights, she sacked him. But that was after reinstating him to cabinet after he had been sacked by the previous premier Nathan Rees. And, as premier she never condemned Obeid or Tripodi.

One of the ironies of Keneally's political career is that her comeback attempt might have had a shot without the re-appearance of another actor in the Obeid saga, Sam Dastyari.

The NSW senator has never pretended he didn't spend a lot of time with Obeid when they both ran the NSW Labor Party – Dastyari as general secretary and Obeid as a faction chief.

This week, Labor leader Bill Shorten began preparing his side for a loss in the byelection his party originally hoped would destabilise Prime Minister Malcolm Turnbull.

Coincidently, it recently emerged that Obeid had a surprise guest at a party he held the night Keneally became premier in 2009. None other than his factional counterpart from Victoria and the man who proudly picked Keneally to run for Bennelong: Bill Shorten.